NEC (6701) AI Stock Analysis

• Market Cap: ¥5.88T
• Dividend Yield: 0.55%
• Average Volume (3M): 4.22M
• Price to Earnings (P/E): 23.5
• Beta (1Y): 1.00
• Revenue Growth: 2.68%
• EPS Growth: 56.38%
• Country: JP
• Employees: 105,276
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 52.09
• Shares Outstanding: 1,364,249,300
• 10 Day Avg. Volume: 5,395,680
• 30 Day Avg. Volume: 4,216,096
• PEG Ratio: 1.40
• Price to Book (P/B): 2.15
• Price to Sales (P/S): 1.22
• P/FCF Ratio: 19.23
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: ¥6,490.00
• Price Target Upside: 50.55% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5
• EPS Forecast (FY): 185.73
• Revenue Forecast (FY): ¥3.57T

• Rating: 62 Neutral
• Price Target: ¥4,362.00 ▲(1.18% Upside)
• Action: Reiterated Date: 02/27/26
• Date: Action: Reiterated 02/27/26

The score is driven primarily by improving fundamentals (strong TTM revenue growth and margin expansion with manageable leverage), tempered by weaker cash-flow consistency. Technical indicators are a meaningful drag due to a clear downtrend and bearish momentum. Valuation is moderate (reasonable P/E, low dividend yield).

Positive Factors

TTM Revenue Growth & Margin Expansion

NEC's large TTM revenue gain and margin expansion indicate a durable recovery in core ICT services and network businesses. Higher gross and operating margins likely reflect better business mix and execution, supporting sustainable earnings from multi-year contracts and recurring services.

Improving Leverage and Returns

Reduced leverage and rising ROE signal strengthening capital structure and improved capital efficiency. This provides financial flexibility to fund technology investment, pursue strategic opportunities, and withstand cyclical headwinds while supporting long-term service commitments.

Solid Absolute Cash Generation

Robust operating cash flow and positive free cash flow in absolute terms enhance NEC's ability to fund capex, maintain large multi-year projects, and return capital without heavy external financing. Positive FCF underpins medium-term reinvestment and balance-sheet resilience.

Negative Factors

Weaker Cash-Flow Consistency

Declining FCF growth and weaker cash conversion versus EBIT reduce financial predictability. For a company reliant on large, multi-year contracts, inconsistent cash generation can constrain timing of reinvestment, elevate working-capital risk, and increase sensitivity to contract timing.

Uneven Historical Revenue Trend

The recent TTM surge follows a period of weaker revenue, implying dependence on lumpy project wins or cyclical spending. Such volatility from large government and telecom programs can make sustaining top-line growth more uncertain over the medium term.

Absolute Debt Size & Leverage Variability

Despite improved ratios, material absolute debt and past leverage swings increase refinancing and interest-rate risk during downturns. A sizable debt load can limit strategic flexibility and slow the pace of technology investment or acquisitions when market conditions tighten.

NEC Business Overview & Revenue Model

Company Description

NEC Corporation operates as a provider of information and communication technology solutions in Japan and internationally. The company operates in five segments: Public Solutions, Public Infrastructure, Enterprise, Network Services, and Global. It provides systems integration services comprising systems implementation and consulting; maintenance and support services; outsourcing and cloud services; and system equipment. The company also offers network infrastructure products, including core network equipment, mobile phone base stations, optical transmission systems, and routers and switches; and services and management solutions, such as operation support system (OSS), business support system (BSS), and services. In addition, it provides safer city solutions, including public safety, digital government, and digital finance; software services for service providers, including OSS/BSS; network infrastructure comprising submarine systems and wireless backhaul; and system devices, such as display and projectors, and energy storage systems. Further, the company offers hardware products, such as servers, mainframes, supercomputers, storage products, business and personal computers, point-of-sale systems, automatic teller machines, control equipment, and wireless LAN routers; and software products, including integrated operation management, application servers, security, and database software. It serves public, healthcare, government and media, manufacturing, retail and services, telecommunications, and finance industries. NEC Corporation has collaboration with Analog Devices, Inc. to provide a 5G Network Massive MIMO Antenna Radio Unit for Rakuten Mobile. The company was formerly known as Nippon Electric Company, Limited and changed its name to NEC Corporation in April 1983. NEC Corporation was incorporated in 1899 and is headquartered in Tokyo, Japan.

How the Company Makes Money

NEC generates revenue through multiple streams, primarily from the sale of hardware, software, and integrated solutions in the IT and telecommunications sectors. Key revenue sources include network systems, which provide hardware and software for telecommunications operators, and public safety solutions that cater to government contracts. The company also earns income through systems integration, where it designs and implements complex IT systems for enterprises and public organizations. Significant partnerships with telecom operators and government agencies play a crucial role in securing large-scale contracts, contributing to NEC's earnings. Furthermore, the company's investments in R&D enable it to innovate and stay competitive, allowing for potential growth in emerging markets such as AI and cloud services.

NEC Financial Statement Overview

Summary

Income statement strength (revenue +49.6% TTM with margin expansion) and improving leverage/ROE are partially offset by weaker cash-flow consistency (FCF down ~10.4% TTM and modest cash conversion vs EBIT).

Income Statement

TTM (Trailing-Twelve-Months) results show a strong top-line rebound (+49.6% revenue growth) with improving profitability: net margin rose to ~6.7% and operating margin to ~9.8% versus ~5.1% and ~7.7% in FY2025. Gross margin also expanded (~32.1% TTM vs ~31.0% FY2025), indicating better mix and/or execution. Key weakness: growth has been somewhat uneven historically (FY2025 revenue slightly down), so sustaining the recent surge is the main watch item.

Balance Sheet

Leverage looks conservative for the period: debt-to-equity improved to ~0.27 in TTM (Trailing-Twelve-Months) from ~0.34 in FY2025, with equity building over time. Returns are also trending better, with return on equity up to ~12.0% TTM from ~9.0% in FY2025. Main drawback: total debt remains sizable in absolute terms, and the balance sheet has shown some year-to-year leverage variability, which could matter if operating conditions soften.

Cash Flow

Cash generation is solid in absolute terms (TTM operating cash flow ~¥459B; free cash flow ~¥327B) and free cash flow covers net income reasonably well (~0.79x TTM). However, free cash flow growth is sharply negative in TTM (down ~10.4% vs the prior period shown), and cash conversion versus operating earnings appears weaker in TTM (operating cash flow is ~36% of EBIT, higher than FY2025 but still not especially strong). Overall, cash flow is positive but less consistent than earnings momentum suggests.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	3.52T	3.42T	3.48T	3.31T	3.01T	2.99T
Gross Profit	1.12T	1.06T	1.01T	958.25B	886.41B	861.18B
EBITDA	510.86B	422.03B	382.92B	356.76B	330.96B	331.06B
Net Income	245.91B	175.18B	149.52B	114.50B	141.28B	149.61B
Balance Sheet
Total Assets	4.11T	4.32T	4.23T	4.04T	3.82T	3.73T
Cash, Cash Equivalents and Short-Term Investments	441.34B	584.62B	476.49B	419.46B	430.78B	523.35B
Total Debt	636.30B	666.36B	573.64B	608.48B	597.38B	702.86B
Total Liabilities	1.96T	2.24T	2.14T	2.13T	2.04T	2.16T
Stockholders Equity	2.07T	1.95T	1.92T	1.62T	1.51T	1.31T
Cash Flow
Free Cash Flow	327.27B	218.00B	171.46B	74.41B	76.41B	203.97B
Operating Cash Flow	458.82B	344.41B	271.23B	152.13B	147.52B	274.91B
Investing Cash Flow	-280.77B	-242.17B	-76.02B	-49.59B	-63.38B	-87.49B
Financing Cash Flow	-227.66B	7.03B	-155.51B	-122.79B	-189.62B	-33.61B

NEC Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 4311.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6701, the sentiment is Negative. The current price of 4311 is below the 20-day moving average (MA) of 4383.60, below the 50-day MA of 5112.56, and below the 200-day MA of 4742.72, indicating a bearish trend. The MACD of -400.88 indicates Positive momentum. The RSI at 39.77 is Neutral, neither overbought nor oversold. The STOCH value of 36.42 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:6701.

NEC Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3626	70 Outperform	¥723.99B	13.78	―	1.39%	4.95%	9.54%
9719	69 Neutral	¥1.78T	27.11	―	1.48%	42.98%	48.88%
4307	68 Neutral	¥2.48T	23.78	22.48%	1.14%	4.50%	16.63%
6702	66 Neutral	¥6.60T	13.38	15.02%	0.68%	-8.58%	83.16%
6701	62 Neutral	¥5.88T	23.49	11.69%	0.55%	2.68%	56.38%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
2327	57 Neutral	¥735.63B	26.49	10.07%	1.76%	11.66%	-0.21%

NEC Corporate Events

NEC Launches ¥30 Billion Share Buyback to Bolster Shareholder Returns

NEC Corporation has authorized a share repurchase program under Japan’s Companies Act, approving the buyback of up to 6.8 million shares of common stock, or about 0.51% of its outstanding shares excluding treasury stock. The company set a maximum total purchase amount of 30 billion yen, with repurchases to be conducted on the Tokyo Stock Exchange between February 10 and March 31, 2026, via discretionary trading.

Management framed the move as part of its capital allocation policy that balances aggressive investment in growth areas with shareholder returns through capital gains and stable dividends. The decision reflects improved financial conditions and NEC’s assessment that its current share price is attractive relative to its earnings outlook, although the company cautioned that market conditions may prevent completion of the full planned repurchase.

The most recent analyst rating on (JP:6701) stock is a Buy with a Yen4850.00 price target. To see the full list of analyst forecasts on NEC stock, see the JP:6701 Stock Forecast page.

NEC to Consolidate Major Enterprise and Public-Sector IT Business via Corporate Split

NEC Corporation will absorb the business for large-sized enterprises (excluding food services), governments, and municipalities from its wholly owned subsidiary NEC Solution Innovators through a simplified absorption-type corporate split effective July 1, 2026. By consolidating these operations directly under NEC, the group aims to unify customer touchpoints and integrate management resources such as personnel and expertise, with the objective of enhancing service quality and strengthening market competitiveness in large enterprise and public-sector IT solutions, while executing the reorganization without issuing new shares or changing stated capital and with no expected impact on its ability to meet obligations.

The most recent analyst rating on (JP:6701) stock is a Buy with a Yen5861.00 price target. To see the full list of analyst forecasts on NEC stock, see the JP:6701 Stock Forecast page.

NEC Overhauls Board and Management Structure Ahead of New Mid-Term Plan

NEC Corporation announced a broad reshuffle of its governance and executive structure, including new appointments to its Board of Directors effective after the June 2026 shareholders’ meeting and changes to Representative Executive Officers and Executive Officers effective April 1, 2026. The company will add two foreign nationals, Elly Keinan and Joseph A. Kraft Jr., as independent outside directors to strengthen global insight and diversity, while promoting Kunikazu Amemiya to Corporate Senior Executive Vice President and CFO and Representative Executive Officer, and seeing several outside directors and current executives retire or shift roles. At the same time, NEC will abolish its existing business unit structure and reorganize management around four key domains—IT Services, Social Infrastructure, Technology & Innovation, and Corporate—aimed at accelerating its new mid-term management plan starting in fiscal 2026 and creating a clearer, more synergistic framework to drive global business expansion and enhance long-term corporate value.

The most recent analyst rating on (JP:6701) stock is a Hold with a Yen6500.00 price target. To see the full list of analyst forecasts on NEC stock, see the JP:6701 Stock Forecast page.

NEC Releases Q3 FY2026 Results and Full-Year Outlook

NEC Corporation released materials outlining its financial results for the third quarter of the fiscal year ending March 31, 2026, together with full-year forecasts and selected business topics. The disclosure package appears to be a standard quarterly update summarizing recent performance, outlook for the remainder of the fiscal year, and historical financial data, aimed at informing investors and other stakeholders about NEC’s current operating trends and medium-term expectations.

The most recent analyst rating on (JP:6701) stock is a Hold with a Yen6500.00 price target. To see the full list of analyst forecasts on NEC stock, see the JP:6701 Stock Forecast page.

NEC Delivers Strong Nine-Month Earnings and Lifts Full-Year Profit Outlook

NEC reported solid consolidated results for the nine months ended December 31, 2025, with revenue rising 4.3% year-on-year to ¥2.42 trillion and operating profit surging 46.8% to ¥185.2 billion, helped by strong improvements in profitability. Net profit attributable to owners of the parent nearly doubled to ¥142.3 billion, while non-GAAP operating profit and non-GAAP earnings per share also posted robust gains, indicating stronger underlying performance. The company’s financial position improved, with the equity ratio increasing to 50.3%, and it confirmed a lower per-share dividend level for FY2026 reflecting the April 2025 five-for-one share split. NEC revised its full-year FY2026 forecast upward, now targeting ¥3.56 trillion in revenue and ¥360 billion in non-GAAP operating profit, underscoring confidence in sustained earnings growth and signaling a firmer earnings base for shareholders and institutional investors.

The most recent analyst rating on (JP:6701) stock is a Hold with a Yen6500.00 price target. To see the full list of analyst forecasts on NEC stock, see the JP:6701 Stock Forecast page.

NEC Restructures Fire and Disaster Prevention Business

NEC Corporation announced a corporate restructuring involving the transfer of its fire and disaster prevention business to NESIC Holdings, Ltd., and subsequently to NEC Networks & System Integration Corporation. This move is part of a broader strategy to strengthen NEC’s business foundation in the digital transformation and social infrastructure domains, enhancing its capabilities in serving domestic regions and local governments.

The most recent analyst rating on (JP:6701) stock is a Buy with a Yen6500.00 price target. To see the full list of analyst forecasts on NEC stock, see the JP:6701 Stock Forecast page.